Among top 10 most-valued auto firms globally, TaMo drives into elite club

Tata Motors has entered the club of the top 10 most valuable automobile firms globally, becoming the first domestic carmaker to achieve this feat. With a market capitalisation of $51 billion, the owner of the luxury Jaguar and Land Rover (JLR) brand is now more valuable than Stellantis, which owns brands like Peugeot, Citroën and Chrysler, and even General Motors, owner of Chevrolet, GMC and Cadillac and Buick. Shares of Tata Motors have rallied nearly 50 per cent so far this year — most among the top 10 global automakers. The sharp rally has helped the Tata Group’s second-most valuable firm close the valuation gap with the likes of Honda Motors, Volkswagen and BMW.

 

Last week, Nomura raised the price target for Tata Motors from Rs 1,141 to Rs 1,294 with a ‘buy’ rating. The target price offers a 12 per cent upside from current levels. The brokerage said JLR’s execution can lead to significant upsides for the stock. This coupled with the proposed demerger will unlock value for the commercial vehicle business, Nomura added, re-rating the stock to 11 times its enterprise value-to-Ebitda from 10 times.

Earlier this year, Tata Motors announced that it would form two separate companies, with one housing the commercial vehicles business and the other passenger vehicles businesses, including JLR.

The company in May also obtained shareholders’ nod on the scheme of arrangement pertaining to the conversion of A-shares into ordinary shares. The scheme, first announced in July 2023, involves the issuance of seven ordinary shares of Tata Motors for every 10 A-ordinary shares held. The move is aimed at simplifying and consolidating the company’s capital structure and paving the way for the demerger.